2 Townhouse, 1 loan?

Question

Hello,

I currently have contract to buy a duplex in Lexington, KY.  Two weeks into the loan/under writing process, the lender just told me the lot/structure is considered two townhouses, not a duplex (I confirmed he is correct per local PVA).

Instead of one conventional loan, the lender now requires two separate loans (split total price) to purchase.  Downside is split single contract into two, double closing costs and increased mortgage insurance costs.

MY QUESTION:

Does this sound correct, or is the underwriter mistaken...Do multiple townhomes require their own individual loans for each single unit (even if apart of the same structure)?

Andrew White · Answer

Thank you for the prompt feedback!

Wayne Brooks · Answer

Your not really going to double your closing costs....some items yes, but many are bases on price, including PMI which should be the same.

Robert Smith · Answer

This should depend largely on how the property is deeded. Most underwriters and lenders have their own set of rules but generally they all agree with each other. If they are requiring you to make this 2 separate loans more then likely most lenders are going to require the same. If the property is deeded as one parcel it could be a duplex or a 50 unit building and it would be one loan. If these are 2 different parcels there is not much of a a work around. One good thing about separate parcels is that it would be easier in the end to sell one and keep the other or refinance them individually, could always pay one off early and have one mortgage longer. There can be an upside to this even though the initial cost is a down side. If you wanted to fight one mortgage for both units, look at the electric meter and water meter for the building. If there is only one coming into the building this could be justification of one loan however may not work. You could always have deeded and surveyed into one parcel however the cost and time to do this would be more then closing 2 separate loans and moving forward.